Commissioner of Administration Jay Dardenne speaks during the presentation of Gov. John Bel Edwards' Fiscal Year 2017-2018 Executive Budget proposal to the Joint Legislative Committee on the Budget, Thursday, Feb. 23, 2017 at the State Capitol.

No midyear deficit, so Edwards administration releases $60M

Commissioner of Administration Jay Dardenne speaks during the presentation of Gov. John Bel Edwards' Fiscal Year 2017-2018 Executive Budget proposal to the Joint Legislative Committee on the Budget, Thursday, Feb. 23, 2017 at the State Capitol.

Gov. John Bel Edwards' administration is allowing Louisiana agencies to spend $60 million that had been withheld amid concerns that income projections may come up short and force the state to make midyear cuts.

Rather than have a deficit this year, Louisiana collected more money from taxes than expected, so Commissioner of Administration Jay Dardenne told lawmakers Wednesday the proposed cuts to safety-net hospitals, public colleges and other areas won't be necessary.

"I authorized them to spend the money they were budgeted to spend," Dardenne told the Joint Legislative Committee on the Budget.

Republican Rep. Cameron Henry, committee chairman from Metairie, questioned the release of the money. Henry said if departments reduced spending this year, those cuts could be made permanent and help lessen a hefty budget gap, estimated around $700 million, that Louisiana faces in the financial year that begins July 1.

"Why would we give them permission to spend the $60 million when we're facing a shortfall?" Henry asked. "Wouldn't it make sense to hold back some of that?"

New Orleans Rep. Walt Leger, the House's highest-ranking Democrat, said lawmakers expected the Edwards administration to release the money if the state brought in enough revenue to cover the expenses in the budget. The money, he said, was budgeted to agencies and only to be withheld if there was threat of a midyear deficit.

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Dardenne agreed: "There was no shortfall."

The $60 million was initially withheld at the urging of House GOP leaders, who worried the budget for the financial year that ends June 30 spent more money than the state would receive, setting Louisiana up for another round of midyear cuts.

When revenues come up short of the income forecast, agencies must slash spending, a situation that repeatedly occurred over the past nine years.

But Edwards and a majority of lawmakers refused to reduce spending in anticipation of that possibility, and rather than come up short, the state's income projections ended up being conservative. Louisiana collected $153 million more than budgeted. Lawmakers will decide how to spend that excess cash in the current legislative session.

Under the Edwards administration plan for the cuts submitted months ago, about one-third of the reductions, if they had been made, would have hit the health department.

A nearly $18 million cut would have been levied on private operators of the state-owned charity hospitals and clinics, growing to $66 million with lost federal matching dollars, a 4 percent hit. Public colleges would have lost nearly $13 million. One month's payments to sheriffs for housing state inmates in their jails would have been withheld to save $14 million. And $761,000 would have been stripped from senior centers, forcing temporary closures.